Loopholes and revenues: Five questions

They’re the nefarious sounding — but perfectly legal — perks in the Tax Code that House Speaker John Boehner says could dig up new revenue for the government without raising taxes. President Barack Obama has called that math bogus.

There are also plenty of similar provisions on the corporate side of the Tax Code ranging from breaks for oil and gas producers to the special treatment of carried interest income paid to private-equity managers.

All told, these provisions cost the U.S. Department of the Treasury more than $1 trillion every year in uncollected revenue — more money than the government actually takes in from individuals.

So what loopholes are on the table?

It’s unclear — for now. The question dogs lawmakers and the public alike.

No one — from Boehner to Obama — is ready to say which provisions they’re willing to scrap to gin up the revenue that Democrats are demanding to avert the fiscal cliff.

But the one advantage both sides have going into the fiscal talks is that no one is new to this game anymore.

The Gang of Six has haggled over the deficit for several years. Vice President Joe Biden led a group focused on the issue last year, Boehner and Obama held their own talks and the supercommittee convened for several months last fall in a failed bid to resolve the fiscal crisis.

“This is not new,” said Rep. Kevin Brady, a Texas Republican who sits on the tax-writing Ways and Means Committee.

These talks invariably return to one small list of “loopholes” that could be repealed to raise revenue, including: the depreciation schedule for corporate jets; oil and gas breaks enjoyed by the five largest companies; and an accounting technique known as last in, first out.

Expect to hear a lot more about these over the next month.

How much revenue would those generate?

Not much — and that’s the problem.

The big-ticket tax items that would really rake in revenue — like the mortgage interest deduction and the break for charitable contributions — are politically fraught.

That leaves about $100 billion — maybe a little more, depending on how the math is calculated — on the table from scrapping provisions for corporate jets, oil and gas companies and the so-called LIFO accounting technique.

That’s a drop in the bucket compared with the $1.6 trillion in revenue the Obama administration says it’s seeking.

In the days after the election, the GOP focus on loophole closings to generate money was seen as a breakthrough — the party was finally willing to deal on revenue.

But as the attention shifts to how little money some of those provisions net, the parties seem on the verge of returning to their old divisions.

In his news conference on Wednesday, Obama was skeptical loopholes could generate enough upfront revenue and rejected GOP efforts to get credit for money that might flow into the government’s coffers from economic growth.

Yes, many like those "loopholes" but making it simpler would help individuals and spur the economy. There is way too much uncertainty about future tax policy. We need clarity now.

I like Gov Romney's idea of capping itemized deductions since don't hit companies, but instead "wealthy" individuals. I say "wealthy" since since $200K/year does not equal "millionaires" and it doesn't feel that wealthy in NYC, Silicon Valley or other areas.

And what are the proposed spending reforms?

We heard this during the campaign:

“I’ve put forward a specific $4 trillion deficit reduction plan…. And the way we do it is $2.50 for every cut, we ask for $1 of additional revenue…. That’s how the bipartisan commission that talked about how we should move forward suggested.”— Obama

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If there's any mandate, it includes tax revenue increase AND spending reforms. They go together like chocolate and peanut butter.

Realistically, the "loopholes" idea doesn't seem very feasible or even significant. Many Conservatives are basically scraping around and trying to dig up some solution that doesn't sound too Liberal and can't admit that raising taxes on the "wealthy" would be a good idea.

Bush had his way and now it's time to give the President Obama and other Progressives a chance to make a big difference.

Realistically, the "loopholes" idea doesn't seem very feasible or even significant. Many Conservatives are basically scraping around and trying to dig up some solution that doesn't sound too Liberal and can't admit that raising taxes on the "wealthy" would be a good idea.

Bush had his way and now it's time to give the President Obama and other Progressives a chance to make a big difference.

This is Fantasyland Economics.

We are drowning in oceans of red ink and taxing the wealthy isn't going to even make a dent.

Bush did what Obama is doing. Borrow, print and spend. After we tax the rich, we're still going to be borrowing, printing and spending.

We need government spending to stimulate the economy?

12 years since the dot com bubble let out and where is all the economic growth from this government spending? Less than 2% annual GDP growth year after year. 8% unemployment year after year.

You see these people should have thought twice before they gifted their money to Romney. If any are in hock, or went crazy it's their fault. Obama has a great ground game, and when it came down to the last minute, the American people went for someone who really cares about them. ALL of THEM !!

I think the GOP should just close their eyes, pinch their nose, and VOTE FOR OBAMA's BILL !! The American people will love it. Also, the rich can close a few loopholes if more is needed. They won't get poor. Obama can remind them that at one time they used to pay a LOT MORE double then what they will pay for his policy. The America is in full agreement. More than 70% of the people want the wealthy to be taxed. Many rich folk even came to Obama last year and asked him to raise their taxes. He's trying to help them not to become too spoiled. It's like Daddy governing their allowance. LOL There are a lot of people with lots of money that don't mind. They call it charity. If you're not charitable you can't enter the kingdom of God. It's in the Bible. Go read Matthew.

There's one problem. There are a lot of people that make $200,000 a year, and don't think they're rich. They think they're well off, but not rich. So, I guess I'm poor. LOL Obama's got money...he doesn't care. Why should they. Like I said before in my posts, I think Obama will have to compromise on the salary part of the tax agreement. The Dems last year thought he should tax at one Million, but it wouldn't generate enough income. I also know that the lower numbers often have small businesses that file their personal income with their business income. They shouldn't do that. Maybe this is where it will be explained.

Obama is out of touch with this I think. If they have employees, and they have to purchase health care, and all that it will be a big strain. They really need a break. They will bring home a middle class income, but their business generates more. This is where they need a new form. Obama, they need a new form. That way they won't be taxed. If it was me I'd use a business form for my business, and then what I brought home would considered your personal income, and that's what being taxed. So, it shouldn't be part of the business. I don't know. I'm ignorant on this. I have no business. If I did, I would cap my salary to where it's comfortable, and then be frugal. Old man Thomas Watson, of IBM long time ago, did that...the greatest CEO there ever was.

Listen, "Ask not what your country can do for you, but what you can do for your country". It's so important if you're a Republican to write your Congressmann and Congresswoman, to bargain regarding this with Obama so he can compromise. Work with him, and give him tips, about how he can generate more income. We all want to come out ahead, and not go over the cliff. There is a lot at stake here. Sure we'll have more money coming in, but it will be a strain on the middle class and lower income people. Let's have a heart heart here. Romney obviously let his true colors come out yesterday. He so forgets the 47%. I'm glad God interceded. He did. Obama is good for this country.

The only thing that makes sense is the cap on deductions. To me this raising the rates is Obama's way to protect his wealthy friends. They have so many deductions the rates going up probably wouldn't effect them at all. Do you know any star who doesn't have some "charity" - I'm sure some go to the charities but it is also very misused. Cap is a good idea. Also, business expenses are very misused - I'm sure Obama's Hollywood friends can write off all sorts of things like facials that I consider luxuries.

They also need to take a close look at the tax-credit loopholes as well. Many of these are "refundable credits", which means the person gets the cash money from the Treasury even if he/she has paid zero taxes. In that case it merely turns into another form of welfare. And to put salt on the wound, much of it ends up in...(you guessed it!)... Mexico! Is America great, or whut?!

All the above and more is what's needed. Republicans need not only to give up their protective allegiance to the rich, they need to do it boldly, in a showy way to show us they are not favoring the rich at the expense of the rest of us. For they have been favoring the rich and in a big, unfair way since Reagan first took office. Since then we have seen the top tax rate cut from 70% to 28% (under Reagan) and capital tax rates go down and estate taxes temporarily eliminated (under W.) and then set way too low. All this has squeezed and cost the middle class and increased our number of poor while growing alienating income inequality at record rates. Republicans should join Democrats in making the richest citizens the ideal American citizens that Republicans exalt and preach about: independent, self-sufficient, relying on government for no financial breaks at all -- no Social Security or Medicare, for they don't need them; no business or corporate tax breaks because government can't create jobs and therefore such breaks aren't needed. They take responsibility of meeting their own financial needs – all of them. (I believe France is now taxing the second annual million at 70% now, something we should also consider doing.)

all of them. (I believe France is now taxing the second annual million at 70% now, something we should also consider doing.)

WHY - so the government can waste more money? It would be one thing if you saw the money being used for good causes but I see it being misued. Just look at the money that has been wasted on "green" energy companies that have gone primarily to benefit Obama bundlers. Abound Solar is a good example - some say it's owned by Valerie Jarrett - and it's under criminal investigation. This is where our money is going -

Taxpayer money is being used to make our politicians rich - why should anyone pay for that! And any idiot who thinks the Democrats are fighting for the middle class and poor is just being sold a bill of goods. They are as corrupt and as bad if not worse than the republicans. Worse because they pretend to be the holier than though - look at Pelosi - she has made tons off the tax payers money. Biden has so many shady deals it isn't funny.

My children haven't even reached 10 years of age and they already owe the Federal Government $50,000 a piece.

I don't give a crap about your children.

If you worried about what "your children" owe the government, maybe you should have compained about Bush's two unfunded wars, medicare giveaway, and tax cuts (That didn't create jobs).

And again, I don't give a crap about your kids. My only hope is that they grow up just like you, and spend their adult lives angry and complaining, while you collect you government welfare and yell at the clouds.

Let's start with the Clinton administration tax rates. According to the "nonpartisan" CBO, that would bring in an estimated $824,000,000,000 over ten years. I hate this ten year stuff. These people can't even handle one years. But, OK. We have a $1 trillion plus deficit far into the future if we keep this stuff up. That $82.4 billion a year amounts to 8.24% of the deficit. A slight dent at best.

Now, closing loopholes. What's a loophole? Remember it is the Congress that wrote the tax law - and I'm assuming that they read what they write. So, someone's loophole is someone else's absolutely necessary deduction. How about a tax system with no "loopholes", deduction, exceptions or exemptions? OK, the poor would be exempted. How about an end user consumption tax? All other Federal taxes would be repealed along with the 16th Amendment.

All Federal taxes? Yep. Including taxes on those mean businesses? Yep. Some heresy coming. Businesses of any kind do not now pay, now have they ever paid,taxes. Sound stupid? Think. For a business to pay for anything like rent, your wages, utilities and those taxes, first they must sell goods or services. Their products. Included in the price of everything you buy are all those costs. If they're not included, the business goes bust - and no more jobs. Look into the FairTax. Not what I say, I'm an acolyte. Look into the actual proposal and think about it.

Now, along with that we add in a substitute for the 16th - a spending limit amendment. Note, it's not a balanced budget amendment, a spending limit amendment. WE and the States have to do this since Congress and the administration don't have the will - read cojones. Limit total appropriations in any FY to 98% of he second prior FY's total tax receipts. And require all appropriations to be complete before the start of the FY, not dribbling through the year. And nothing off budget. Include the payoff of maturing debt - no more roll overs. The only exception allowed - a declared war.

Folks, either we get serious or we're Greece. Time to make a choice. Maybe past time.

The conservatives on this board -- where did they get their economics and public policy degrees? They certainly have no balls, since they are in panic mode.

Here's how I would summarize what's wrong with what I would politely call their "analysis."

1. They start with the assumption that all government spending is wasteful, but they leave little sense that they know where the bulk of this spending goes, or what good it does.

2. They make the false argument that because raising taxes won't entirely solve the problem, it is not part of the solution. Remember, there were yearly surpluses by the end of the Clinton administration, and a project of an erasure of the debt going forward.

3. They invoke Greece as what we could become. But there are two issues in Greece. The first is high budget deficits, but the second is a badly implement "austerity" budget which, by slamming on the breaks, is exacerbating a recession and worsening the problem. Ditto with Europe generally (note by the way that "socialist" Germany is doing very well, thank you).

When you're skidding, you steer out of the skid. A panic reaction only makes it worse. The president is exactly providing us with this cool, measured reaction. I hope some of the "sky is falling" (but I got mine) republicans in the house follow his lead. We'd all benefit.

A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns 3% annually and such capital gains were taxed at 30%, it would generate between $190 billion and $280 billion in tax revenues, more than any other tax shelters